09 September 2016, Houston — U.S. drillers this week added oil rigs for a tenth week in the past 11, according to a closely followed report on Friday, the longest streak of not cutting rigs since 2011, as the rig count recovered to February levels.
After falling 206 rigs in the first half of the year, the rig count has increased or held steady every week so far this quarter. The rig count plunged from a high in October 2014 after crude prices collapsed in the biggest price rout in a generation.
Drillers added seven oil rigs in the week to Sept. 9, bringing the total rig count up to 414, the most since February, energy services firm Baker Hughes Inc said.
That is well below the 652 oil rigs active during the same week a year ago, but is up from the recent bottom of 316 rigs seen in May.
All of the rigs added this week were those units located offshore in Louisiana that returned to service after shutting last week due to Tropical Storm Hermine, analysts said.
Drillers removed seven offshore rigs during the week ended Sept. 2 and added eight back during the week ended Sept. 9.
U.S. crude futures were on course to rise about 4 percent this week on hopes for a global deal on stabilizing crude output after Saudi Arabia, the leading oil producer in OPEC, and Russia, the biggest producer outside the group, agreed on Monday to cooperate in oversupplied markets.
On Friday, U.S. crude was trading at above $46 a barrel, close to the $50-mark that analysts and drillers say make drilling more viable. Futures for calendar 2017 were trading over $50.
“We anticipate slow rig growth with all of the usual price caveats,” said James Williams, president of energy consultant WTRG Economics in Arkansas.
“If oil prices continue to rise, the rig count will continue to rise and U.S. production will stop declining and start to increase,” Williams said, noting there is typically a two-month lag between prices increasing and rigs entering service.
More than two-thirds of rigs added over the past two months were located in the Permian basin in west Texas and eastern New Mexico.
Williams forecast those new rigs would help boost Permian production by about 3,000 barrels per day in September and about 18,000 b/d in October, which should bring production in the basin to about 2 million b/d.
U.S. oil and gas exploration and production company Apache Corp this week said it made a significant discovery in the Permian containing an estimated 3 billion barrels of oil and 75 trillion cubic feet of gas.
*Scott DiSavino; Editing – Marguerita Choy – Reuters